To The Moon

Major U.S. banks will begin reporting fourth-quarter 2023 earnings on Friday, starting with jpmorgan Chase, Citigroup, Wells Fargo and Bank of America.

Us bank shares surged in the fourth quarter, helped by a return to risk appetite amid expectations of lower interest rates. At the business level, investment banking and wealth management, which suffered a significant drag last year, are likely to get a boost. However, as the lagged effects of higher interest rates may continue to ripple through the economy, the large inflow of high-interest deposits and the slowdown in lending business growth suggest that banks' net interest income is at risk of declining.

In addition, in a high interest rate environment, the depressed market investment environment led to a continued decline in trading revenue. Souring commercial and credit card loans and rising defaults have encouraged banks to keep increasing provisions for bad loans, which will offset the rebound in investment banking revenues. The deterioration in the economic outlook contrasts with the continued rise in stock prices, with bank shares reporting that gains began to slow in mid-to-late December and that trading volumes were shrinking. The market has not yet priced in any major moves. The MACD technical indicator shows signs of divergence from the top.

Faced with a challenging economy, persistent inflation, high interest rates and a dearth of deals this quarter, analysts have cut earnings estimates for five of the six banks (Bank of America, Citigroup, jpmorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley) in the past three months. Jpmorgan Chase (JPM) was the only bank to raise its earnings guidance this quarter. Analysts generally expect profits to fall at Citigroup, Wells Fargo and Bank of America, while jpmorgan's latest update suggests its results could beat its upgraded estimates, predicting earnings at the big six banks will fall an average of 13% from the fourth quarter of last year.

$Citigroup(C)$

Citigroup is scheduled to report earnings on 12-Jan-2024. The last time Citigroup reported earnings on 13-Oct-2023, the stock decreased by -0.2%.

As you can see from the table below, the data displays the percentage moves had for the last 12 quarters around earnings. The 3 day run up into earnings is notable as it shows that the stock increased 75% of the time for an average gain of 1.3%.

Trade Ideas:

Credit Put Spread

• sell $C 20240119 52.0 PUT$

• buy $C 20240119 50.0 PUT$

Short 25-Delta Put

• sell $C 20240119 51.0 PUT$

Key trades from tigerPC:

$JPMorgan Chase(JPM)$

JPM is scheduled to report earnings on 12-Jan-2024. The last time JPMorgan Chase reported earnings on 13-Oct-2023, the stock increased by 1.5%.

As you can see from the table below, the data displays the percentage moves had for the last 12 quarters around earnings. The 3 day run up into earnings is notable as it shows that the stock increased 75% of the time for an average gain of 0.9%.

Trade Ideas:

Credit Put Spread

• sell $JPM 20240119 167.5 PUT$

• buy $JPM 20240119 162.5 PUT$

Short 25-Delta Put

• sell $JPM 20240119 165.0 PUT$

Key trades from tigerPC:

$Wells Fargo(WFC)$

WFC is scheduled to report earnings on 12-Jan-2024. The last time WFC Chase reported earnings on 13-Oct-2023, the stock increased by 3.1%.

As you can see from the table below, the data displays the percentage moves had for the last 12 quarters around earnings. The 3 day run up into earnings is notable as it shows that the stock increased 67% of the time for an average gain of 0.8%.

Trade Ideas:

Short Put

• sell $WFC 20240216 45.0 PUT$

Key trades from tigerPC:

$Bank of America(BAC)$

Bank of America is scheduled to report earnings on 12-Jan-2024. The last time Bank of America reported earnings on 17-Oct-2023, the stock increased by 2.3%.

As you can see from the table below, the data displays the percentage moves had for the last 12 quarters around earnings. The 3 day run up into earnings is notable as it shows that the stock increased 50% of the time for an average gain of 0.4%.

Trade Ideas:

Short 25-Delta Put

• sell $BAC 20240216 32.0 PUT$

Key trades from tigerPC: